Bill and Ellen Sweatt Plan to Invest $2,500 a Year

question 12

Essay

Bill and Ellen Sweatt plan to invest $2,500 a year in an educational IRA for their recently born granddaughter, Sloane Martin.They will make these deposits on December 31st of each year.Bill and Ellen feel they can safely earn 8%.How much will be in this account on December 31 of the 18th year?

---

Definitions:

Nominal Income

The total amount of money earned by an individual or entity before adjustments for inflation or deflation.

Leading Economic Indicators

Variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes.

Business Cycle

The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession).

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often measured by a price index.